Why Have a Business Strategy?

The number of businesses that do not have a business strategy is startling. They survive based solely on their ability to cope with whatever is thrown at them.

If they’re a rapidly growing business, then it’s not surprising when the lack of strategy leaves that growth unsupported. It’s only a matter of time until the error occurs that, at best prevents continued growth and at worst causes collapse.

The old saying of fail to plan; plan to fail is unfortunately true. All businesses need to have a thought-through strategy to survive and prosper. That strategy needs to be current. So the old business plan used to convince the bank to support you when the business started, will not do. A business strategy is a living thing not just a dry document.

Business Strategy Defines Success

Any business strategy needs to define its objectives. It needs to do so in ways that are SMART; specific, measurable, actionable, relevant and timebound. From the outset a business strategy therefore defines success.

It also acknowledges obstacles and that some things can only be educated guesses at the time the strategy is made. Some of those guesses will be correct and others wrong in which case the strategy will evolve. This is always the case.

3 Immediate Benefits

Strategies give three immediate benefits to a business:

If an organisation knows the general thrust of the direction it wants to travel it can set sensible policies. The whole team is aware of those policies. This enables understanding of why decisions are being taken in the way they are. More importantly it enables individuals and teams to act in line with the policy rather than always stopping to ask for direction. If too many people make the wrong decisions, then either the policy is not clear or isn’t communicated effectively.

From policies come systems and processes. For start-ups if something is working well, then it’s good practice to turn it into a process so that it becomes repeatable and consistent. This saves time as the common elements can be stored and reused easily. It also saves money through appropriate sharing. The best growing businesses are built systematically so they are able to allocate resources efficiently and repeatedly.

Strategies depend on milestones. Most business strategies are long term, but even a 3 month project can have milestones and KPIs. These are in part to monitor and maintain the systems but they also act as points of celebration and success. They serve to confirm that the desired objective 1 or 2 years hence is attainable and on track. Done well milestones motivate organisations.

Strategy Builds Businesses

Strategies can be large or small documents to enable understanding and consistency so they are live. Whatever size they build upon:

defined policies communicated well.

systems and processes that maximise the effectiveness of all resources.

the setting of motivational milestones that map the successful completion of parts of the business strategy to the desired objective.